The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Schwab U.S. Large-Cap ETF (SCHX) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and SCHX is a Schwab ETFs Large Blend fund. So, what’s the difference between VB and SCHX? And which fund is better?
The expense ratio of VB is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than SCHX over the past ten years.
In this article, we’ll compare VB vs. SCHX. We’ll look at fund composition and annual returns, as well as at their holdings and performance. Moreover, I’ll also discuss VB’s and SCHX’s portfolio growth, industry exposure, and risk metrics and examine how these affect their overall returns.
Summary
| VB | SCHX | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Schwab U.S. Large-Cap ETF |
| Category | Small Blend | Large Blend |
| Issuer | Vanguard | Schwab ETFs |
| AUM | 137.72B | 30.89B |
| Avg. Return | 14.25% | 14.60% |
| Div. Yield | 1.14% | 1.41% |
| Expense Ratio | 0.05% | 0.03% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
The Schwab U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.
VB’s dividend yield is 0.27% lower than that of SCHX (1.14% vs. 1.41%). Also, VB yielded on average 0.35% less per year over the past decade (14.25% vs. 14.60%). The expense ratio of VB is 0.02 percentage points higher than SCHX’s (0.05% vs. 0.03%).
Fund Composition
Industry Exposure
| VB | SCHX | |
| Technology | 16.85% | 25.13% |
| Industrials | 16.11% | 8.65% |
| Energy | 3.67% | 2.72% |
| Communication Services | 2.4% | 11.26% |
| Utilities | 2.19% | 2.37% |
| Healthcare | 14.34% | 13.04% |
| Consumer Defensive | 4.14% | 5.97% |
| Real Estate | 9.56% | 3.13% |
| Financial Services | 13.06% | 13.82% |
| Consumer Cyclical | 13.03% | 11.63% |
| Basic Materials | 4.63% | 2.28% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
The Schwab U.S. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.
SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.
VB is 8.28% less exposed to the Technology sector than SCHX (16.85% vs 25.13%). VB’s exposure to Industrials and Healthcare stocks is 7.46% higher and 1.30% higher respectively (16.11% vs. 8.65% and 14.34% vs. 13.04%). In total, Communication Services, Energy, and Consumer Defensive also make up 9.74% less of the fund’s holdings compared to SCHX (10.21% vs. 19.95%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| SCHX Holdings | Weight |
| Apple Inc | 5.37% |
| Microsoft Corp | 5.1% |
| Amazon.com Inc | 3.69% |
| Facebook Inc A | 2.08% |
| Alphabet Inc A | 1.84% |
| Alphabet Inc Class C | 1.78% |
| Berkshire Hathaway Inc Class B | 1.32% |
| Tesla Inc | 1.31% |
| NVIDIA Corp | 1.25% |
| JPMorgan Chase & Co | 1.18% |
SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.
Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.
Risk Analysis
| VB | SCHX | |
| Mean Return | 1.15 | 1.24 |
| R-squared | 85.03 | 99.83 |
| Std. Deviation | 17.82 | 13.8 |
| Alpha | -4.02 | -0.14 |
| Beta | 1.21 | 1.02 |
| Sharpe Ratio | 0.74 | 1.03 |
| Treynor Ratio | 10.15 | 14.06 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Mean Return of 1.15 with a Alpha of -4.02 and a Standard Deviation of 17.82. Its Sharpe Ratio is 0.74 while VB’s R-squared is 85.03. Furthermore, the fund has a Treynor Ratio of 10.15 and a Beta of 1.21.
The Schwab U.S. Large-Cap ETF (SCHX) has a Beta of 1.02 with a R-squared of 99.83 and a Sharpe Ratio of 1.03. Its Alpha is -0.14 while SCHX’s Treynor Ratio is 14.06. Furthermore, the fund has a Mean Return of 1.24 and a Standard Deviation of 13.8.
VB’s Mean Return is 0.09 points lower than that of SCHX and its R-squared is 14.80 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than SCHX. The Alpha and Beta of VB are 3.88 points lower and 0.19 points higher than SCHX’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | SCHX |
| 2020 | 19.08% | 20.9% |
| 2019 | 27.37% | 31.4% |
| 2018 | -9.3% | -4.52% |
| 2017 | 16.24% | 21.91% |
| 2016 | 18.31% | 11.78% |
| 2015 | -3.65% | 1.02% |
| 2014 | 7.51% | 13.33% |
| 2013 | 37.8% | 32.54% |
| 2012 | 18.22% | 16.06% |
| 2011 | -2.68% | 1.61% |
| 2010 | 27.89% | 15.88% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% respectively.
The year 2013 was the strongest year for SCHX, returning 32.54% on an annual basis. The poorest year for SCHX in the last ten years was 2018, with a yield of -4.52%. Most years the Schwab U.S. Large-Cap ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.33%, 15.88%, and 16.06% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $31,069 | 14.25% |
| SCHX | $10,000 | $36,987 | 14.60% |
A $10,000 investment in VB would have resulted in a final balance of $31,069. This is a profit of $21,069 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in SCHX, the end total would have been $36,987. This equates to a $26,987 profit over 10 years and a compound annual growth rate (CAGR) of 14.60%.
VB’s CAGR is 0.35 percentage points lower than that of SCHX and as a result, would have yielded $5,918 less on a $10,000 investment. Thus, VB performed worse than SCHX by 0.35% annually.
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